Why the street is cheering the new CFO at Tata Motors 

Balaji comes with great corporate pedigree, having worked with HUL for more than two decades, and has brought with him impeccable standards of governance. Every investor loves increased disclosures, which the street is now cheering. Of course, several of the changes are coming from the top.

The new chairman of Tata Sons, the group’s holding company, N Chandrasekaran, has increased his focus on Tata Motors, especially the ailing passenger vehicle business. A comprehensive electric vehicle plan involving other Tata companies is also in the works.

This week could prove to be another milestone in the rush of transparency that Tata Motors has embraced. On June 22, Tata Motors will hold a JLR investor day at its Castle Bromwich plant in the UK. After a long hiatus, investors and analysts will gain an insight into the workings of the JLR business. Meetings will be held with heads of different verticals at JLR and more data will be shared with stakeholders. Analysts say this is a big step in the right direction and something that the street has been yearning for.

However, there is still lots of work to be done. The biggest issue for JLR is its free cash flow generation. It is still FCF negative to the tune of Rs 5,159 crore as on FY18 due to the big drain on the passenger vehicle business. That apart, higher investments, lower operating profit and adverse working capital has hit JLR in the last financial year.

What remains to be seen is how the new CFO navigates through these issues. Remember, many CFOs in the past have come in with a lot of fanfare and left a lot to be desired by the time their tenure ended.

Are things going to be different this time? Investors seem to believe so.